A borrower takes out an interest-only loan of $180,000 at an annual interest rate of 5%. What is the interest due for the first month?
Correct Answer
B) $750
To calculate the first month's interest, multiply the loan amount by the annual interest rate and divide by 12: $180,000 × 0.05 ÷ 12 = $750.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
Daily rate calculation involves determining the cost or income per day by dividing the total amount by the number of days in the period (usually a year or a month). This is a fundamental step in proration.
The capitalization rate (cap rate) is the ratio of a property's net operating income to its sale price, expressed as a percentage. It is used to estimate value and compare profitability of investment properties. Cap Rate = NOI / Value.
The capitalization rate (Cap Rate) is the rate of return on a real estate investment based on its expected income.
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